Credit Card Churning
So what exactly is credit card churning and will it benefit you? There is a school of thought that thinks that this method works to gain travel miles and reward points. It basically consists of finding a credit card with a promo or sign up bonus that will give you loads of travel miles or reward points and applying for that card. You then will have to meet the minimum spending requirement and collect your miles or reward points. Though this may seem lucrative for some people, I tend to think that the negatives of this outweigh the advantages.

>“Churning” will lead to a downgrade of your credit score. Each time you apply for new credit, that creditor will “ping” your credit, which will in turn drop your credit score anywhere from 2 to 20 points. That downgrade of your credit score may make it difficult to obtain a car loan, personal loan, mortgage or other credit cards.

>You must be diligent in paying off these credit cards and not adding to them or just paying the minimum amount due. The more debt you carry, the less credit worthy you may appear to your potential creditors.

I find that using two or three carefully chosen credit cards works best for me. I have one card that is dedicated to online purchases only. I have one card that I use for travel and most everything else. Both cards are reward type cards. One gives me airline miles dollar for dollar for all of my purchases. The other is points based that I can redeem dollar for dollar on gift cards – hotel, travel, restaurant, shopping, etc.